OpenAI claims it has evidence DeepSeek used its model to train competitor

Good morning. In today’s newsletter:

• OpenAI’s IP theft concerns

• A deadly stampede in India

• The threat of ‘a demographic suicide’

OpenAI says it has found evidence that Chinese artificial intelligence start-up DeepSeek used the US company’s proprietary models to train its own open-source competitor, as concerns grow over a potential breach of intellectual property.

The San Francisco-based ChatGPT maker told the FT it had seen some evidence of “distillation”, which it suspects to be from DeepSeek.

The technique is used by developers to obtain better performance on smaller models by using outputs from larger, more capable ones, allowing them to achieve similar results on specific tasks at a much lower cost.

Distillation is a common practice in the industry but the concern was that DeepSeek may be doing it to build its own rival model, which is a breach of OpenAI’s terms of service.

DeepSeek did not respond to a request for comment made during the lunar new year holiday. The release of its R1 model last week prompted panic in the US about the advances Chinese labs are making on bootstrapped budgets.

• DeepSeek’s ‘aha moment’: The Chinese AI lab’s advances come from its use of “reinforcement learning” to lessen human involvement in producing responses to prompts.

• A lifeline for Apple?: Some investors and analysts believe DeepSeek’s low-cost breakthrough vindicates Apple’s faltering AI strategy. Here’s why.

• ‘Buying opportunity’: Retail investors have ploughed more than $900mn into Nvidia shares this week as individual traders rushed to scoop up AI stocks that sustained a heavy blow from fears over DeepSeek.

Here’s what else we’re keeping tabs on today:

• Economic data: Japan reports December trade statistics. The Philippines, US and EU report fourth-quarter GDP estimates.

• Results: Apple, Shell, Japan Exchange Group and Tokyo Electric Power Company Holdings report earnings.

Five more top stories

1. Police have said 30 people died and dozens more were injured yesterday in a stampede at a Hindu festival in northern India. The Kumbh Mela in Uttar Pradesh state has been described as the largest single gathering in the world, and officials expect about 450mn people to attend the 45-day festival this year. Here’s what else we know about the incident.

2. The Federal Reserve has left US interest rates on hold and has signalled that it is in no rush to adjust monetary policy. The central bank on Wednesday kept its main interest rate at 4.25-4.5 per cent, defying President Donald Trump’s calls for cuts.

• More US news: Donald Trump has scrapped his order to freeze hundreds of billions of dollars in federal domestic funding, in a major climbdown following a widespread backlash.

3. Renault has urged Nissan to negotiate a higher premium from Honda as the French group seeks to benefit from a merger of the two Japanese rivals. Executives at the French shareholder visited Japan this week to meet Nissan to relay its view on the proposed deal. Here’s what we know about the discussions.

• New Sony CEO: The Japanese tech group has chosen long-serving finance head Hiroki Totoki as its next chief executive, amid the company’s multibillion-dollar push into producing more original content.

• More Japan news: Tokyo’s stock exchange is to unveil major new protections for minority investors, as corporate Japan faces a record-breaking wave of management buyouts.

4. A surge in gold shipments to the US has led to a shortage of bullion in London, as traders amass an $82bn stockpile in New York over fears of Trump administration tariffs. The wait to withdraw bullion stored in the Bank of England’s vaults has risen from a few days to between four and eight weeks. Here’s how the tariff fears are driving the US gold rush.

5. An overwhelming majority of Greenlanders have rejected US President Donald Trump, saying they do not want to be bought by America, according to an opinion poll. Here’s what the survey showed.

The Big Read

For airlines, loyalty schemes — and in particular air miles programmes — have grown into multibillion-dollar businesses that can be more profitable than the flights themselves. But as many airlines report record demand — and frequent flyers become more adept at unlocking perks — the programmes risk becoming victims of their own success.

We’re also reading . . . 

• ‘Anti-woke’ vs industrial push: Australians face starkly different visions for the country’s future in the nationwide vote, which must take place by May 17.

• Product copycats: Brands need to live with a wave of imitators as duping becomes not only widespread but popular, writes John Gapper.

• Finding ‘stolen children’: An international, humanitarian-run genetic database can help families track down kids coercively adopted in wartime, writes Anjana Ahuja.

Chart of the day

Two-thirds of the world’s population now lives in countries where people are having babies at a rate too low to replace their population, a shift one think-tank has called “a demographic suicide”. Governments offer a catalogue of creative incentives for childbearing — yet fertility rates just keep dropping.

Take a break from the news . . . 

Do you fantasise about leaving your work problems behind at the end of the day? The hit drama Severance takes the post-pandemic dilemma of work-life balance to a dystopian extreme, writes Emma Jacobs.